The FTC’s Misguided Case Against Meta

FTC Commissioner Lina Khan. (Photo by Graeme Jennings/AFP/Getty Images.)

Lina Khan has been an outspoken critic of Big Tech since her law school days, demonstrating a singular focus on the big bad guys—first Amazon and then others. Now, as the chairwoman of the Federal Trade Commission, she has the chance to test her antitrust theories in court. But the FTC’s ongoing challenge against Meta, the parent company of Facebook, reveals the weakness of going after Big Tech in any way possible.

Last fall, Meta announced it would acquire Within, best known for its fitness app Supernatural. In July, the FTC sued to block the sale. But the FTC is making a much different argument from what we normally see in antitrust fights, one that is on shaky grounds from the perspective of economic theory.

Typically, the kinds of mergers that competition authorities like the FTC find most concerning are “horizontal” mergers among competing firms that sell the same products or services. When the publishing giants Penguin-Random House and Simon & Schuster wanted to merge, the Justice Department moved to block the deal on grounds that it would reduce competition for certain authors’ manuscripts. If the FTC challenges the proposed merger of two grocery stores, as it may with Kroger and Albertsons, it will be because it believes the combination will result in less competition.

But Meta and Within don’t compete. Meta makes virtual-reality headsets and Within makes virtual-reality apps. Meta’s hope is that the addition of Within will spur interest in the company’s efforts in the “metaverse,” a catchall term for a host of VR and augmented-reality products and services that might hypothetically become connected in much the way the internet is. Meta already has gained recognition in the VR industry for developing the highly successful Quest 2 VR headset. In addition to hardware, the company increasingly has been entering the VR software and gaming sector. The FTC’s initial complaint charged that Meta’s Beat Saber game, which focuses on music, competes with Within’s Supernatural, which is a fitness app, but an amended complaint dropped those claims.

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